Currently, there is no effective hepatitis C virus (HCV) vaccine. Despite introduction of harm minimization strategies in Australia since the late 1980s, incidence of HCV infection among injecting drug users is extremely high. An estimated 16,000 new HCV infections occur each year in Australia, with approximately 90% related to injecting drug use. This estimate of new HCV infections has increased from 11,000 in 1997, due largely to an increasing prevalence of injecting. Although the vast majority of people with new HCV infection are asymptomatic at the time of infection, an increasing number of cases of newly acquired HCV infection are detected through enhanced HCV surveillance in Australia. For HCV surveillance purposes newly acquired HCV infection is defined as a person with a positive HCV antibody with evidence of a negative HCV antibody in the previous 24 months, or a person with acute clinical hepatitis (e.g. jaundice) with a positive HCV antibody where other causes of acute hepatitis have been excluded. In 2000 approximately 450 cases of newly acquired HCV infection were detected through enhanced surveillance in Australia. Further cases of newly acquired HCV infection are detected through primary care clinics that regularly screen injecting drug users for HCV, and referrals to tertiary care clinics of people with acute hepatitis. We propose to establish a longitudinal cohort of current injecting drug users (injected within previous 12 months) with newly acquired HCV infection. Within this cohort we propose to offer antiviral therapy for HCV infection with a 24-week course of pegylated interferon monotherapy to those people who have evidence of HCV viraemia (HCV-RNA positive) and biochemical hepatic inflammation (elevated liver enzymes). The major objectives of the study are to examine the feasibility of interferon therapy for newly acquired HCV infection among injecting drug users. In addition, the untreated group within the longitudinal cohort will be studied to examine the natural history of early HCV infection. Both groups will continue followup for a period of three years, to examine sustainability of HCV clearance (both through natural and therapeutic means) and monitor incidence of HCV reinfection among people with evidence of HCV clearance. Drug use behavior including injecting drug use will also be closely monitored, to assess the impact of enrollment into the study and specific drug dependency and risk reduction strategies.